Interim Regulations of the People's Republic of China on Private Enterprises
Interim Regulations of the People's Republic of China on Private Enterprises
Interim Regulations of the People's Republic of China on Private Enterprises
Order of the State Council [1988] No. 4
June 25, 1988
Chapter I General Provisions
Article 1 These Regulations are formulated to encourage and guide the healthy development of private enterprises, to protect the legal rights and interests thereof and strengthen the supervision and administration thereof and promote the prosperity of the socialist planned commodity economy.
Article 2 For the purposes of these Regulations, "a private enterprise" shall mean a profit-oriented economic organization that has over eight employees and whose property is privately owned.
Article 3 The private economy is a supplement to the socialist public economy. The State protects the legal rights and interests of the private enterprises, which shall conduct its business within the scope stipulated by laws, regulations and policies of the State.
Article 4 The staff and workers of a private enterprise may organize trade union in accordance with the law. The staff and worker's legal rights and interests shall be protected by laws of the State.
Article 5 The private enterprises are entitled to establish the private enterprise associations.
Chapter II Classification of Private Enterprises
Article 6 The private enterprises are classified into the following three types:
(1) sole proprietary enterprises;
(2) partnership enterprises; and
(3) limited-liability companies.
Article 7 A "sole proprietary enterprise" means an enterprise which is invested in and managed by a sole individual.
The investor(s) of a sole proprietary enterprise shall assume unlimited liability for the debts of the enterprise.
Article 8 A "partnership enterprise" means a enterprise which is funded in accordance with an agreement and managed together, and whose profits and losses are borne jointly by more than two persons.
The partnership enterprise shall have a written agreement.
The partners to the partnership enterprise shall assume unlimited joint and several liability for the debts of the enterprise.
Article 9 A "limited-liability company" means an enterprise whose investors shall assume liability to the company to the extent of their investment and which shall be liable to its liabilities to the extent of all of its assets.
A limited-liability company shall meet the following requirements:
(1) the name of the company shall be titled with "limited-liability company" or "limited company";
(2) the articles of associations of the company shall conform with the stipulations of these Regulations;
(3) the number of investors shall range from two to thirty;
(4) the registered fund shall have a legal certificate of capital verification;
(5) the transfer of an investor's contribution shall be agreed upon by the other investors; if the number of investors is more than three, the transfer shall be agreed on by the majority of the investors;
(6) the registered fund of the company shall not be reduced; and
(7) the company shall not offer shares to the public.
The limited-liability company with more than thirty investors shall apply and report specially to the industrial and commercial departments and go through the registration formalities upon the permission.
Article 10 The limited-liability company shall obtain the status of legal person in accordance with law.
Chapter III Establishment and Termination of a Private Enterprise
Article 11 The following persons may apply for establishing a private enterprise:
(1) villagers in rural areas;
(2) unemployed residents in cities and towns;
(3) individual industrial and commercial households;
(4) persons who have resigned or been discharged; and
(5) persons who have retired, and other people permitted by laws, regulations and policies of the State.
Article 12 Within the scope stipulated by laws, regulations and policies of the State, a private enterprise may conduct its production and business in the lines of industry, construction, traffic and transportation, commerce, catering, service, repairing and consulting of science and technology.
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